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The top 12 wireline providers in Q3 2016: AT&T and Verizon see broadband gains, but cable retains the upper hand

As the third-quarter earnings period comes to an end, FierceTelecom is taking a look at how the top wireline telcos performed in terms of revenue, broadband subscribers and video services.

To see our full reporting on the third quarter, click here.

A key focus during the quarter was the inconsistent growth of broadband services among telcos, deepening the growth disparity with cable operators that continued to see broadband growth during the quarter.

In addition to wavering broadband trends, a number of telcos signed deals to acquire assets to bolster their fiber networks and service portfolios.

Broadband challenges

While cable MSOs added about 2.44 million broadband subscribers during the first three quarters of 2016, telcos lost nearly 475,000 subscribers. Telcos’ IP broadband revenues rose 12 percent year-over-year, while total broadband was up 5 percent.

Jeffrey Wlodarczak, principal and senior analyst of media & communications at Pivotal Research Group, said in a research note that U.S. cable operators raked in 830,000 net broadband subs in the third quarter, while the telcos lost 135,000 net subs in the period.

The inconsistent results are the product of three key trends: An ongoing effort to attract higher ARPU customers, tightened credit policies and asset integration.

AT&T

AT&T improved its broadband subscriber additions during the third quarter, adding 156,000 net IP broadband customers. That was a big improvement over the second quarter, when AT&T added only 74,000 IP broadband subscribers—a figure that included 20,000 new business broadband additions.

However, legacy DSL losses continued to challenge the service provider’s efforts. AT&T lost 5,000 total broadband subscribers, though that was an improvement over Wells Fargo’s estimate of 15,000 sub losses.

Verizon

For Verizon, the main story was recovering FiOS internet subscriber growth. Following second-quarter decline in new net connections due to the wireline labor strike, Verizon added a total net of 90,000 FiOS internet connections. Net broadband subscribers rose by 24,000 in the quarter.

Centurylink

At CenturyLink, ongoing efforts to tighten its credit policies for broadband subscribers continued to take their toll in the third quarter. CenturyLink reported that it lost 40,000 subscribers in the quarter, ending the period with a total of 5.95 million, down sequentially from 5.99 million subscribers in the second quarter.

Following a challenging integration process stemming from its acquisition of Verizon’s wireline assets and establishing a call support center in the United States, the telco lost over 99,000 broadband customers in the third quarter. The losses particularly impacted the company’s California, Texas and Florida (CTF) markets.

The service provider recently told investors that returning FiOS subscribers to pre-acquisition levels in the fourth and following quarters is a key priority.

Windstream

Windstream reported that consumer broadband connections were 1.06 million, down sequentially from 1.07 million in the second quarter.

Like its counterparts CenturyLink and Frontier, Windstream hopes that by enhancing speeds on its copper network—to provide up to 100 Mbps and higher—and tightening its credit policies, it can also drive new broadband subscriber growth.

During its third-quarter earnings call, Windstream noted that it was starting to see a higher uptick in take rates for higher speeds in the excess of 50 percent.

READ MORE: GLOBAL FIXED BROADBAND MARKET TRENDS, STATISTICS AND PROGRESS – 43% OF THE WORLD’S POPULATION HAD REGULAR ACCESS TO THE INTERNET IN 2015

M&A bounty

Broadband was only one part of the telco’s story in the third quarter. A number of telcos announced their intent to purchase other large providers or regional providers to bolster their network reach and service portfolios.

The largest of the deals announced in the third quarter was clearly CenturyLink’s intent to acquire Level 3. Through this acquisition, Level 3 will be able to offer its enterprise customer base the benefits of Level 3’s global footprint with a combined presence in more than 60 countries.

When CenturyLink closes the Level 3 deal next year, it will gain an additional 200,000 route miles of fiber, including 64,000 route miles in 350 metropolitan areas and 33,000 subsea route miles connecting multiple continents.

Fellow telco Windstream also jumped on the M&A train, announcing a deal to acquire EarthLink. The EarthLink acquisition provides two benefits to Windstream: An expanded fiber footprint, but also a deeper product set with SD-WAN and access into additional complementary market verticals. EarthLink will bring 29,000 route miles to the fold, 16,000 of which expand Windstream’s footprint, bringing its total to 145,000 route miles.

There were also a series of smaller deals that other telcos conducted to enhance their own fiber networks to better respond to wholesale and retail business needs.

Take Lumos Networks’ new acquisition for Clarity Fiber and TDS’ purchase of InterLinx.

By purchasing Clarity Fiber, Lumos Networks gains access to a 730-mile fiber network with 75 on-net fiber locations located across four states in the Southeast. The majority of Clarity’s operations and fiber miles are located in North Carolina, but it also has presence in Georgia and South Carolina.

TDS Telecom’s purchase of InterLinx added 170 miles of fiber to its network allowing it to more effectively target business and wholesale customers in St. George, Utah, a market that ranked as the fifth fastest-growing metro area in the country. Additionally, the acquisition—which includes Interlinx’s subsidiary Tonaquint—could enhance TDS Telecom’s FTTH footprint.

Take a look at the chart below to see the service provider metrics. Also, check out our second quarter report here.

RankTotal RevenueBroadband Adds/DropsTotal Wireline Broadband subsVideo Adds/Drops
1. AT&T$40.9 billionadded 156,000*14.2 million323,000 DirecTV
2. Verizon$30.9 billionadded 90,000 FiOS**7.04 million36,000
3. CenturyLink$3.92 billionlost 40,0005.95 million49,000
4. Frontier$2.52 billionlost 99,0004.4 millionlost 92,000
5. Windstream$1.34 billionlost 10,0001.06 millionnot reported
6. TDS Telecom$1.3 billionadded 600233,00013,000 IPTV
7. FairPoint$221.6 millionlost 1,893310,000not reported
8. Consolidated$191.5 millionadded 7,915470,000lost 2,800
9. Cincinnati Bell$312 millionadded 18K***300,0006,600
10. Shentel$156.8 millionadded 900 cable modem****14,00051,000 (cable)
11. Hawaiian Telcom$97.8 millionlost 2,20291,0005,700
12. Lumos Networks$51.8 millionadded 325 FTTH8,307 FTTHlost 24 IPTV subs
* lost 161,000 DSL subs
** lost 326,000 U-verse TV subs
** lost DSL 66,000 subs
*** lost 7,500 DSL subs
**** DSL subs remained flat
 

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